Tribunal dismisses Department's application, upholds nullification due to notice non-service. Limits rectification to clerical errors.

The Tribunal dismissed the Department's Miscellaneous Application, confirming the nullification of proceedings due to the non-service of notice under Section 143(2) of the Income Tax Act. Additionally, the Tribunal clarified that rectification under Section 254(2) is limited to correcting clerical or arithmetical errors and cannot be used for a review, citing precedents. The Tribunal emphasized its lack of jurisdiction to review orders under the guise of rectification. The decision was rendered on 01/06/2021.

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Issues Involved:
1. Service of Notice under Section 143(2) of the Income Tax Act.
2. Applicability of Section 292BB of the Income Tax Act.
3. Scope of Rectification under Section 254(2) of the Income Tax Act.

Detailed Analysis:

1. Service of Notice under Section 143(2) of the Income Tax Act:
The primary issue raised by the assessee was the non-service of notice under Section 143(2) of the Income Tax Act. The Tribunal observed that the notice dated 28/8/2015 was served on Abdul Wahid and not on the assessee or his agent. The Tribunal referenced the case "Harsingar Gutkha (P.) Ltd. vs. CIT," where it was held that the service of notice within the stipulated period is mandatory. In the absence of such service, the assessment proceedings are deemed to have ended. Consequently, the Tribunal quashed the entire proceedings, holding them null and void.

2. Applicability of Section 292BB of the Income Tax Act:
The Revenue contended that the Tribunal failed to consider the provisions of Section 292BB of the Act, which states that if an assessee has appeared in any proceeding or cooperated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served. The Tribunal, however, did not find this argument persuasive, noting that the Department did not raise this objection during the initial arguments.

3. Scope of Rectification under Section 254(2) of the Income Tax Act:
The Department filed a Miscellaneous Application for rectification under Section 254(2), arguing that the Tribunal's order contained mistakes. The Tribunal emphasized that the scope of Section 254(2) is limited to rectifying apparent mistakes, which are clerical or arithmetical in nature. It cannot be used to review or reappraise the case. The Tribunal cited several judgments, including "CIT Vs. Vardhman Spinning" and "CIT Vs. Suman Tea and Plywood Industries (P) Ltd.," which clarified that rectification cannot be equated with a review. The Tribunal concluded that the Department's application was essentially a request for a review, which is not permissible under the statute.

Conclusion:
The Tribunal dismissed the Miscellaneous Application filed by the Department, reaffirming that no notice under Section 143(2) was served on the assessee, and the proceedings were correctly quashed. The Tribunal also reiterated that it does not have the jurisdiction to review its own orders under the guise of rectification as per Section 254(2) of the Act. The order was pronounced in the open court on 01/06/2021.

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